A letter to the University of Hawaiʻi about our budget challenges

Dec. 21, 2009
Dear Colleagues,

As we complete our fall semester, I want to update you regarding our efforts to meet the major budget challenges we face to maintain our university system.

We all know that the University of Hawaii provides critically needed opportunities for our citizens and contributes in so many ways to the health and well being of the people of Hawaii. The university educates Hawaii's citizens and, thereby, generates the foundation of the state’s workforce. UH graduates drive innovation, build our economy and provide needed services and leadership throughout the state. Without the University of Hawaii, our state’s future would be drastically diminished.

Unfortunately, the university’s biennium budget was severely and unexpectedly reduced by $154 million because of the state’s budget crisis. The economic crisis came suddenly and the deficit continues to grow every quarter, leaving the state and the university with an unpredictable financial situation. We have attempted to address the challenge with a combination of strategies.

First, even with the increased revenue associated with higher enrollments and the tuition increases already approved by the Board of Regents through 2012, campuses and system units were given extremely difficult budget targets. They have each responded with a variety of cost savings through the consolidation of programs, holding positions vacant, energy reductions and academic and administrative efficiencies. And we have had to reduce the size of our academic and administrative work force.

Many of these actions will take some time to fully implement and achieve the resultant savings. Overall, these efforts have been designed to minimize the negative impact on the quality of education for our students as much as possible while maintaining desperately needed investments in our facilities.

Second, the revenue reductions imposed by the state include a restriction in this year and next of 13.8 percent of our general fund salaries. Consequently, even with the implementation of the measures described above, the university still needed to secure a temporary 5-percent salary reduction for all of our unionized faculty and staff.

While painful for our employees, this was, and is, the lowest pay reduction of any state employee group. The temporary pay reduction was proposed to be accompanied by equivalent leave during non-instructional days. We deeply appreciate the action of our HGEA-represented employees who ratified a new contract that enables both a 5-percent salary savings and additional energy savings without impact on the instructional schedule, and our executive employees who accepted salary reductions ranging from 6 to 10 percent.

While the foregoing actions have helped narrow the budget shortfall, we cannot cover our deficit sufficiently without our faculty also accepting temporary pay reductions through this extremely difficult biennium. It is deeply disappointing that we remain at an impasse in our negotiations for a new contract with the University of Hawaii Professional Assembly, which represents our faculty.

To aid in your understanding of the current situation let me review the process that has occurred. The UH administration and UHPA have discussed numerous proposals over 15 months in some two dozen meetings. What follows is a brief summary of the history and current status of our negotiations:

On Sept, 15, 2009, the UH administration formally offered a written two-year proposal that included

A two-year contract with a temporary 5 percent salary reduction.

Guaranteed restoration to today’s salary levels at the end of two years.

No salary cut for those who retire by Dec. 31, 2009.

Implementation of a payroll lag, as applies to all other state employees.

Several other items requested by UHPA, including initiation of a tuition assistance program for faculty dependents.

UHPA requested that its membership cast a preferential vote on this offer, and it was rejected.

UHPA then countered with a proposal that called for

A four-year contract that accepted a temporary 5-percent salary reduction for the first two years.

Guaranteed restoration to today’s salary levels at the end of the two years.

Plus a salary increase of 7.5 percent in the third year and an additional 7.5 percent increase in the fourth year.

Temporary implementation of the payroll lag for the first two years.

Workload reduction for community college faculty.

Given the uncertainty in the state’s economic condition, the UH administration could not agree to the proposal for such large increases and rejected UHPA’s counter-proposal.

In a meeting with the federal mediator on Nov. 16, 2009, the UH administration provided the following informal alternative that the UH administration would be willing to pursue to end the continuing impasse if UHPA would also be willing to do so:

A four-year contract with a temporary 5-percent salary reduction during the first two years.

Guaranteed restoration to today’s salary levels for the third and fourth years even if there are future general fund reductions or restrictions.

Reopening of negotiation for possible salary increases depending on improvement in economic conditions.

Extension of the offer of no salary cut this fiscal year for those who retire by June 30, 2010.

No retrenchments for fiscal reasons for two years.

Several other items previously offered that had been requested by UHPA.

UHPA rejected this informal alternative as well.

On Dec. 16, the UH administration provided to UHPA a modification to the final written formal offer of Sept. 15, 2009 to reflect the fact that no settlement had yet been reached. Due to the delay in implementing an agreement, the temporary 5-percent salary reduction over two years would be taken as a 6.667-percent salary reduction over 18 months beginning on Jan. 1, 2010.

In the long term, I believe we must increase faculty salaries to remain competitive with other higher education institutions and to attract and retain the talent and excellence in teaching and research that Hawaii deserves. That is why the UH administration is willing to commit to guaranteeing restoration of the temporary faculty salary reductions and to considering re-openers on salary increases once we have a better understanding of our potential savings from retirements or program consolidations and of the state’s economic recovery, which will affect funding support for the university in the next biennium. Furthermore, we will continue to seek funding from the legislature to defray the increased cost of health benefits for our employees.

I am committed to working with our faculty and staff and their representatives, our students, our alumni, government leaders and local community leaders to promote a greater understanding of the importance of the University of Hawaii to the state, particularly in these difficult economic times, and to protect and advance our core missions of education, research, innovation and community outreach.

However, the university simply does not have the money to meet UHPA’s expectations during the current funding crisis if we are to meet our budget shortfall and preserve much-needed programs and services.